Darjeeling tea output down 10%; exports hit

KOLKATA: The year 2010 has been a bad year for the Darjeeling tea industry. Production is set to be lower this year by at least 10% which has impacted supplies to export markets of Japan, Germany and the UK. The Darjeeling tea industry, which reported a 12% lower crop between January and August this year, may end up with a production of less than 8 million kg.

Talking to ET, Sanjay Bansal, chairman of Darjeeling Tea Association, said: "The crop was affected during the first flush due to drought. Even the second-flush production was affected due to erratic weather conditions. At times, it has been difficult for the exporters to meet the export commitment due to the shortage. It has been a bad year for the industry. However, the only silver lining was a steady domestic demand. Surprisingly, the domestic demand for the Darjeeling tea has gone up by 30% which generally doesn't happen. But the domestic price cannot match the international prices that Darjeeling planters fetch."

Mr Bansal, whose Ambootia Group is the second largest Darjeeling tea company in the country, said this year's would be one of the poorest crops in the last 40 years. The problem was triggered by a severe drought which started in October 2009 and continued till April 2010, when leaves dropped. As a result of this, the first-flush tea, which comes around mid-May and contributes about 20% of the crop, was down by about 35%.

Mr Ashok Lohia, chairman of Chamong Tee, said: "Even though prices firmed up due to a shortfall, producers failed to benefit because of low production. The cash flow has not improved for most companies compared to FY10. However, the surge in domestic demand has brought much cheer to us. We are happy that there are takers for Darjeeling tea, which is a bit pricey, in the domestic market as well. We can leverage this trend next year as well." There are 87 tea estates in Darjeeling, all of which are running now. However, bad weather was not the only reason behind the crop loss. Shifting to organic methods of production has also led to a less output. During 2010, as many as 35 Darjeeling gardens changed hands with some crops being lost in the transformation.